Utility Week

28 | FEBRUARY 2021 | UTILITY WEEK Customers Analysis Growing debt cloud looms over utilities Jane Gray reports on a recent Utility Week/ WNS roundtable addressing customer debt, which has only worsened under the onslaught of the Covid pandemic. T he collection of outstanding pay- ments from customers has long been a sensitive area of utilities' operations. Despite the essential nature of the services provided by energy and water companies, these are oen the bills customers are most likely to default on first when they encounter financial difficulty, and providers are end- lessly stuck between a rock and a hard place as they tread a highly political line in chas- ing down what they are owed. The arrival of Covid-19 has exacerbated this challenge to an unprecedented degree. The quasi-social care role that has increas- ingly been expected of energy and water providers in recent years has intensified as millions of consumers have met with job losses or sudden reductions in income. And the problem is only increasing as meas- ures to curb the spread of the virus wear on into 2021. In this context, Utility Week recently hosted a virtual roundtable discussion for collections and customer care representa- tives at energy and water companies to explore how they are handling this difficult landscape while also attempting to protect their organisations' bottom lines. The event, hosted in association with global customer service partner WNS, fos- tered a frank exchange of experiences as well as concerns about what the future holds in terms of pressures for collections depart- ments. To begin with, the discussion centred heavily on the ways in which the pandemic has complicated the challenge of identify- ing customers with emerging financial dif- ficulties and, critically, those in urgent need of support. Universally, the group agreed that those customers experiencing the most extreme forms of financial stress and vulnerabil- ity are least likely to contact their utilities providers to explore options for managing their payments or usage more effectively, or to receive signposting to third parties who might be able to provide assistance. Participants were generally stumped on how to tackle this problem in better ways than have consistently been tried in the past – through proactive messaging about the availability of social tariffs (in the case of water) and flexible payment options or through working with third parties who can act as trusted intermediaries. There was a very real concern from par- ticipants that as the economic fallout of the pandemic hits home, more families and indi- viduals will unnecessarily run themselves into severe financial distress or deprive themselves to an extreme degree of their essential services, simply because they are unaware that utilities may be able to help them, or afraid that contacting them will make their situation worse. Getting smart about data There was some discussion of the potential for using artificial intelligence and machine learning technologies to assist with identi- fication of emerging financial problems for customers, however few participants were using this kind of technology as part of busi- ness as usual. Several did, however, say that they are increasingly linking in streams of external data from credit rating agencies and other relevant sources to gain a more complete appreciation of their customers' circumstances. There was also an admission that the sector as a whole could act in a more coor- dinated and strategic way when it comes to both data sharing and third party partner- ship to reduce the emotional burden on customers in financial distress. "We need to think about the trauma involved for custom- ers in having these very difficult financial conversations multiple times with the differ- ent people they owe money to," commented one water sector representative. "We need to What attendees said: "We tried reaching out in advance to people to say, it looks like you're struggling. But we found the customers came back on the defensive asking how we had found out that information." "We need to think about the trauma involved for custom- ers in having these very dif- ficult financial conversations multiple times with all the different people they owe money to… we need to get smarter here." "On the one hand we are given a very clear corridor of costs for collections and bad debt [by Ofgem] via the price cap. And on the other hand, we are told about the kind of support we should be offer- ing to the financially vulner- able. Those two things can be very disconnected." "There is still a lot to wash through in terms of debt and collecting from customers who have stopped or reduced their payments this year. Partly that's because we, like a lots of others, paused our collections activity for about three months and it takes time to get the whole machine back up and run- ning." "We're building up a blob of customers who have been hidden because they haven't cancelled their direct debits – and they're good customers – but actually they are under- paying. There's a big risk in that space."

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